Published 8/1/2010
Michael J. McCaslin, CPA

Managing your practice ahead of the curve

Strategize now to maintain your independence

The reality of healthcare reform is challenging orthopaedic physicians and their practices to prepare for change. Although the real changes (bundled payments, the establishment of Accountable Care Organizations) are expected to take effect between 2012 and 2014, groups must begin to prepare now to meet the additional emphasis on accountability, quality, outcomes, and consequences for performance.

In the 1990s, hospital strategies targeted the primary care physician in preparation for capitation. Today, the focus is on specialty physicians and strategies that focus on managing a defined population or a single payment for an episode of care. For example, the cardiology market is currently experiencing a tremendous amount of physician integration into hospital systems. This integration is driven by a number of factors, including the following:

  • severe downward economic pressure on cardiology ancillary services (which make up a substantial portion of cardiology compensation)
  • the hospital’s desire to control the activity associated with its single largest service line
  • an attempt by hospitals to recapture the ancillary services they lost to independent cardiology groups

Although some orthopaedic practices have been acquired by hospitals, orthopaedic surgeons overall wish to remain independent. Strategies to ensure independence are both internal and external.

Internal strategies
Internal strategies include reviewing and revising buy-in and buy-out plans to ensure the practice is affordable for new surgeons who wish to join. Income distribution formulas should also be reviewed to ensure that they reward desired physician behaviors—particularly those that will be required in the future healthcare environment—and include appropriate levels of productivity and support for all of the practice’s activities.

With a shortage of orthopaedic surgeons, practices need to find ways to keep senior physicians working. Thus, physician slowdown plans are continuing to evolve.

Internal operational issues include a continued focus on revenue cycle management and strategies to improve operational and physician processes. For example, evaluating and potentially redesigning office facilities could result in a more efficient patient flow and an enhanced patient experience, increasing the practice’s overall patient volume.

External strategies
External strategies evaluate ways to create a stronger organization, such as group-to-group mergers or joint venture opportunities between physicians and hospitals, such as joint-ventured surgery centers, and management agreements over the orthopaedic service line within the hospital. Another important consideration is the potential employment or integration model within the hospital system.

One of the truisms for health care that has not changed over time is that each market is unique, and the solution that works in one marketplace may not work in others. Effective external strategies begin with an understanding of the different environments—hospital, specialties, payors—within each market.

An analysis of the specific local or regional marketplace with respect to these environments should dictate a practice’s external strategy. After establishing that strategy, physicians and practice management can go on field trips and research similar types of projects. Those projects, however, should not be the drivers of strategy; strategy needs to be driven by what’s happening in the specific marketplace.

People generally have two views of difficult environments. In the doom-and-gloom view, the sky is falling and failure is inevitable. The other view involves actively participating in shaping the future and believes that every difficult scenario has an appropriate, positive answer. Obviously, staying a step ahead with proactive, positive, and well-researched, thought-out solutions is the suggested approach. In other words, manage your practice by staying ahead of the curve.

Michael J. McCaslin, CPA, of Somerset CPAs, Indianapolis, Ind., is a principal in Somerset’s Health Care Team and a member of the faculty for the AAOS Practice Forward: Managing Your Practice Ahead of the Curve course scheduled for Sept. 24–26, 2010.